2013 (10) TMI 76 - HC - Income Tax

Addition u/s 69C of the Income Tax Act - source of cash payments towards labour contractor - Held that - The principal contention urged before us is that the vouchers found in the premises were prepared in lieu of a Bank guarantee has also been rightly rejected by the Tribunal. Assessee had failed to come up with any plausible documentary evidence to suggest that it had in fact obtained the cash vouchers in lieu of bank guarantees and also it had not explained the source of the sum of Rs.15,72,000/- which have been paid on different dates - It was quite evident that such payments were in the nature of cash transactions with its labour contractor outside its books of account - It was not the assessee s claim that Rs.15 lakhs was part of Rs.30 lakhs which was paid to the sub- contractor. The assessee had also failed to come up with any credible evidence to explain the corresponding Source of income to incur such payments and the same had not also been recorded in its books of account - AO was justified in assessing the said sum of Rs.15,72,000/- in the hands of the assessee Decided against the Assessee.

Summary

Issues involved:
1. Interpretation of vouchers found in premises as part of payment to sub-contractor.
2. Determination of vouchers as unaccounted investment or in lieu of bank guarantee for work completion.

Analysis:
1. The High Court analyzed the questions raised in the appeal regarding the nature of vouchers found in the premises. The Court noted that the questions raised were not substantial questions of law but rather questions of fact. The appellant's counsel failed to establish any substantial legal questions as required under Section 260(A) of the Income Tax Act. The Court further reviewed the findings of fact recorded by the authorities and concluded that the vouchers found were not prepared in lieu of a bank guarantee, as contended by the appellant. The Tribunal's order highlighted the lack of plausible documentary evidence to support the appellant's claim, leading to the conclusion that the payments represented cash transactions with the labor contractor outside the books of account. The Court upheld the Tribunal's decision that the payments fell within the purview of Section 69C of the Act, justifying the assessment of the sum in the hands of the assessee.

2. The Court specifically referenced the concluding paragraph of the Tribunal's order, emphasizing the absence of credible evidence to explain the source of the payments and the failure to record them in the books of account. The Tribunal's decision was based on the understanding that the payments were separate from the amount paid to the sub-contractor and lacked a legitimate income source. As a result, the Court dismissed the appeal, affirming the Tribunal's assessment and decision regarding the nature of the vouchers and the applicability of Section 69C of the Income Tax Act.